How are Golden Visas boosting the Portuguese property market?

The Portuguese are currently enjoying the benefits of a strong property market which has been boosted by the attractive prospect of the country’s Golden Visa scheme.

Traditionally, the British and Irish have made up the majority of investors on the Algarve, but in recent years more nationalities have started to sit up and take notice when it comes to what Portugal has to offer.

What is the Golden Visa scheme?

The Golden Visa scheme was set up to encourage foreign investment, and it certainly seems to have worked. The scheme allows foreign investors from outside the European Union to apply for a residency visa, simply by buying a property in the country worth at least €500,000. This, in turn, allows free movement across the 26 EU states that currently make up the Schengen area.

The scheme began in 2012 and since then it has attracted more than 6,300 investors, with many of these coming from countries such as China, Brazil, Russia and South Africa. 

The amount of Chinese interest far outstrips the others and the cumulative investment made by Chinese Golden Visa applicants has so far reached a total of €2.06 billion.

Brazilian investors have also taken an interest in the Portuguese property market, investing €400 million so far, and have clocked up the second largest number of permits issued.

While many other countries are looking to impose greater taxes on foreign property owners or tighten rules on who they allow to buy, Portugal has proved to be a popular alternative with its more open policy. 

The Portuguese government has also decided not to introduce any kind of inheritance tax, and the Non-Habitual Residence (NHR) tax allows a flat rate of 20% personal income tax for any activities performed in Portugal and a tax exemption on foreign income.

The Portuguese market

Prime prices on the Algarve in 2017 saw a 6.5% year-on-year increase, and Lisbon has also seen a positive trend when it comes to price growth and sales volumes. 

The area from Quinta do Lago to Vale do Lobo and Almancil is known as the ‘Golden Triangle’ as it is one of the most exclusive second home destinations in Portugal, with villas worth up to €5 million seeing strong sales.

The number of foreign residents in Portugal has doubled in the last two decades, which follows the trend of increasing numbers of tourists visiting the country.

While the option of the Golden Visa looks tempting, the European Commission has advised caution to countries offering such schemes as it poses a potential security risk.

Although Portugal has been a popular holiday destination in the past, the added incentive of Portuguese residency, and therefore EU citizenship has proved to be a massive draw.

With investment now coming from inside and outside of Europe, the Portuguese property market is in good health. It means that many investors can now not only make money from their asset, but also enjoy their purchase a second home where they can soak up the wonderful Portuguese lifestyle.

*For more information on Portugal property investment, please contact Hopwood House.